Our long-term objective is to understand the regulation of FcgammaR-mediated function of human monocytes/macrophages in health and disease. Clustering of FcgammaR by immune-complexes activates a series of signaling events that culminate in phagocytosis and generation of inflammatory mediators. This activation process is subject to regulation by inhibitory FcgammaR (FcgammaRIIb) and phosphatases such that the final biologic response is tempered. In recent work we found that the inositol phosphatase SHIP-2 is activated upon FcgammaR clustering and serves to downregulate NFkappaB-dependent gene transcription and phagocytosis. Interestingly, although SHIP-1 and SHIP-2 share high-level homology in the catalytic domain, the two enzymes are largely divergent in the non-catalytic regions resulting in unique regulation of signaling pathways. For example, in contrast to the low affinity interaction of SHIP-1 SH2 domain with FcgammaR ITAMs, SHIP-2 associates as efficiently with the phosphorylated ITAM-containing FcgammaR as with the ITIM-containing FcgammaR, suggesting that SHIP-2 influence is likely to have a greater impact on FcgammaR function than that of SHIP-1. Based on these observations we propose the novel hypothesis that SHIP-2 regulates innate immune responses to IgG immune complexes (IC) to contain the inflammatory sequelae that accompany IC clearance, working both through the ITAM-containing and the ITIM-containing FcgammaR, and working in a non-redundant fashion with SHIP-1. To test this hypothesis we propose two Specific Aims. The experiments described in Aim 1 are aimed at analyzing the molecular mechanism of SHIP-2 activation by phagocytic FcgammaR. Such knowledge will be useful in devising ways to subsequently interrupt SHIP-2 activation for functional analyses. In Aim 2, we will perform a detailed assessment of the role of SHIP-2 in modulating FcgammaR-mediated macrophage functions. Our analyses will include a comparison of the ability of SHIP-1 and SHIP-2 to influence FcgammaR signaling and function. We bring to this project several years of experience in dissecting the role of phosphatases in modulating FcgammaR function. Our technical approaches and model systems are innovative and multidisciplinary, encompassing the tools of molecular and cellular biology, biochemistry and immunology. The proposed work holds promise for a better understanding of the IC-mediated inflammatory diseases at the molecular level, and paves the way for novel therapeutic targets.